CASE STUDY

CRH plc: dimensions of successful

corporate strategy
Mike Moroney

Even with a small corporate headquarters in a challenging industry, corporate strategy can be the engine for growth
and development, generating substantial value-added. However, such dimensions of this level of strategy remain
arcane. These issues are explored in this case study on CRH, which is an exemplar of corporate management.

● ● ●

In February 2013, CEO Myles Lee announced full-year construction cycles are longer in duration and larger in
results for 2012 for CRH plc, an international leader in amplitude, while their timing varies between countries.
building materials. Since 2007, in common with its peers In developing economies, construction demand tends to
in the sector, CRH had been hit by the severe global lead GDP growth, in contrast to a lagged relationship in
recession in construction, unprecedented in its scale and mature economies. In particular, capital-intensive, heavy-
synchronised nature since the 1930s. Between 2007 and side investment is characterised by long-term, large-scale
2010, CRH suffered a peak-to-trough decline in earnings of commitments, significant lead times and, therefore, ‘lumpy’
three-quarters. However, the outturn for 2012 confirmed a additions to capacity.
level performance over four years, tentatively indicating a In terms of structural growth, building materials
cyclical floor. Moreover, by adapting its business and port- manifest a dual mature/dynamic character. In developed
folio to new realities, CRH had positioned itself for cyclical (Western) markets, with most buildings and infrastructure
recovery and to capitalise on acquisition and other oppor- already built, construction is stable and largely RMI-based,
tunities arising from over-leverage in the industry. As ever, with population and public investment prime drivers of
Myles Lee and his management team knew that success activity.1 By contrast, in developing markets (Asia, Eastern
depended on CRH’s own corporate-led strategy and actions. Europe and Latin America) and in some Western countries
at an earlier stage of economic development, long-term
construction demand is closely linked to economic growth.
The building materials industry
In general, building materials and products are com-
The industry involves the extraction, manufacture and modities, have long life cycles, and are similar across markets
supply of building materials, products and services for con- and largely stable over time, with price-based competition
struction activity. These include primary materials (such predominant. Production processes are standard. Technology
as cement, aggregates, ready-mixed concrete and asphalt is non-proprietary and, for some products, relatively un-
products), heavyside building products (e.g. concrete prod- sophisticated. Innovation centres on the enhancement of
ucts, road vaults and bricks), lightside building products manufacturing processes, improvements in the ease of use
(e.g. plumbing, heating, electrical and lighting products) and installation of products and the provision of value-
and distribution (‘merchanting’ and DIY). Sectors served are added services and solutions to the customer.
residential, industrial/commercial and infrastructure/public Traditionally, the building materials industry has been
works. End-uses comprise early-cycle new construction fragmented. Production is linked to the location of appropri-
work and late-cycle repair, maintenance and improvement ate reserves, with proximity to the end market being a key
(RMI). factor. Because building materials and products are charac-
Building materials are characterised by several distin- terised by a high weight to value ratio, high transport costs
guishing features. Cyclicality derives from the fact that con- rapidly outweigh scale economies, with the result that the
struction cycles reflect general economic cycles. However, radius of economic activity and competition often can be

This case was prepared by Mike Moroney, Lecturer in Strategic Management at the J. E. Cairnes School of Business and
Economics, National University of Ireland Galway. It is intended as a basis for class discussion and not as an illustration of good
or bad practice. © Mike Moroney, 2013. Not to be reproduced or quoted without permission.

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 640 CRH PLC

150 kilometres or less. In addition, markets are local in and a growing presence in emerging economies in Asia,
nature due to differences in building regulations, con- Central and Eastern Europe and Latin America (15% of
struction practices and product standards. Success is often EBITDA). CRH’s prominence was recognised by many
determined by micro-market factors like locality, quality, industry awards for corporate governance,12 financial
reliability of service and price.2 As a result, the industry reporting, investor relations, and excellence/innovation in
developed over time as a large number of small and environmental and safety practices.
medium-sized firms, often family owned and run.
Structurally, consolidation is an ongoing trend (par-
ticularly in primary materials and merchanting) reflecting
History, growth and development
supply-side concentration and significant merger and CRH was formed in 1970 following the merger of two
acquisition (M&A) activity. During almost two decades to leading Irish public companies, Irish Cement Limited
mid-2009, there were 20 large corporate deals involving (established in 1936) and Roadstone (1949). At that time,
total consideration of US$125 billion (£82.4bn; €97.5bn)3 CRH was sole producer of cement and principal producer of
and an average value to EBITDA4 multiple of 10.3 times.5 aggregates, concrete products and asphalt in Ireland, with
In addition, large international building materials compan- Group sales of €26 million, 95% in Ireland. The Board of
ies, including CRH, had over time leveraged strong local CRH set a clear strategy for the development of the Group:
market positions and/or product competences to expand to seek new geographic platforms in its core businesses
into other regions and areas of activity. Furthermore, and to take advantage of complementary product opportu-
local differences between geographic markets were erod- nities in order to achieve strategic balance and to establish
ing, driven by institutional harmonisation of regulations, multiple platforms from which to deliver performance
standards and tendering, convergence in building prac- and growth. In 40-plus years of operation, the Group has
tices, consolidation of customers and homogenisation of undergone major growth through several phases of devel-
their needs. None the less, the underlying logic of frag- opment, as described below. In general, change has been
mentation prevailed. Globally, the top five producers sup- evolutionary, involving a managed, learning process of
plied only one-fifth of demand for cement, and one-twentieth building, augmenting and layering competences.
for aggregates.6 In the USA, while the top 10 concentration
ratio was 75% for cement, in aggregates it was 30% and in ● Organic market penetration in Ireland (from 1970).
asphalt 25%, with two-thirds of capacity privately held.7 During the 1970s, Irish construction enjoyed a boom
Against the macro backdrop of weakening consumer on the back of a modernising economy. The newly
and investor confidence in the Eurozone balanced by an merged CRH capitalised on this favourable environment
improving outlook in the Americas, the outlook for building through its vertically integrated and leading positions in
materials remained cautious. Notwithstanding cyclical falls heavyside building materials and products.
of over a quarter in construction output in both the USA ● Acquisition-led overseas expansion (from the late
and Europe, the prospects were for an ‘L-shaped’ recovery 1970s). In the late 1970s, with a view to spreading
of sub-trend growth.8 Structurally, overcapacity and low risks and opportunities more broadly, CRH made a
utilisation rates prevailed in certain mature heavyside strategic decision to invest in familiar business areas
markets, particularly in Western Europe, with the prospect overseas, through bolt-on acquisitions. Early expansion
of consolidation, including closure of older, less efficient was in Western Europe (1973). The second domain of
facilities.9 Such restructuring was likely to be exacerbated geographic growth was North America. In 1977, Don
by the hangover from the M&A boom, as heavily indebted Godson (later Chief Executive, 1994–2000) went to the
firms sought to deleverage by selling assets.10 Nor could it be USA with ‘a telephone and a cheque book’. By 2000, the
assumed that developing markets would continue to pro- Americas accounted for over half of Group turnover and
vide a growth stimulus. Some China commentators were profits. CRH’s presence in emerging regions gathered
signalling a property correction in the short term and a peak- pace from the mid-1990s. Initial steps in Latin America
ing of cumulative cement consumption from mid-decade.11 were followed by more substantial investment in Eastern
Europe (notably Poland and the Ukraine) and, latterly,
in Asia (China, India).
Profile of CRH ● Product focus, larger acquisitions (from the late 1990s).
Headquartered in Dublin, Ireland, CRH had annual CRH also expanded in a limited, but highly rewarding,
revenues of €18.7 billion (£15.8bn; $24.0bn) in 2012 and way into new product areas, including merchanting
employed 76,000 people in 3,500 locations in 35 countries and DIY, security fencing, clay brick products and glass
worldwide. The Group enjoyed strong positions in developed fabrication, evolving to a more product-based organisa-
markets in Europe and North America (85% of EBITDA) tion. At the same time, leading industry consolidation,

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 CRH PLC 641

the Group began to supplement its traditional mid-size CRH’s strategy was underpinned by a proven business
deal flow with larger acquisitions. model providing a disciplined approach to long-term value
● Developing value-based growth platforms (from the creation, and by a supportive strategic architecture (struc-
early 2010s). By the early 2010s, CRH’s proven business ture, people and processes).
model had established a global footprint and a diverse CRH served the breadth of construction activity, pro-
product template. The Group adopted a more nuanced viding exposure to multiple demand drivers. Related core
and value-focused approach to strategy, emphasising businesses spanned major primary materials (excluding
accelerated integration, greater coordination, enter- steel and timber), building products and services for con-
prise management and portfolio rationalisation. This struction solutions (primarily heavyside concrete-based,
approach combined the capabilities of large company with selected lightside) and specialist distribution (through
disciplines with local company entrepreneurship. builders’ merchants and DIY stores). In the long term,
CRH’s businesses were underpinned by a high level of
Strategy increasingly scarce reserves. In aggregates (sand and
gravel, crushed stone) CRH’s reserves of 15 billion tonnes
CRH’S strategic vision is to be ‘a responsible international were equivalent to over 80 years of production and were
leader in building materials delivering superior perform- among the highest in the sector.15 In 2011, CRH had 690
ance and growth . . . through the business cycle’13 with quarries/pits in the USA and 350 in Europe.16
the focus on achieving superior long-term returns. Strategy A notable characteristic of CRH’s product/market
was manifested through three core principles: portfolio was leadership (Figure 2). Achieving product/
1 Strategic balance. CRH was assiduous in sustaining a regional leadership in its chosen markets was a deliberate
diversified, broad-based exposure to all segments of con- core strategy of the Group. Reflecting the commodity and
struction demand (see Figure 1). This strategic balance fragmented nature of the building materials industry,
encompassed dimensions of geography, product, sector, CRH focused on securing and maintaining leading posi-
end-use, stage of the cycle and intensity of investment. tions in local or regional (and national) markets and in a
This unique approach smoothed the effects of varying number of product segments or niches. For certain product
economic conditions and provided multiple platforms categories, CRH was a leading player on the global stage,
for growth. An indication of the severity of the industry ranking numbers two and three in aggregates and asphalt,
downturn since 2007 is that, while CRH consistently respectively.15
outperformed peers through previous cycles, in the most Unlike its peers, CRH operated a federal structure, com-
recent down-cycle both balanced and single-product prising a small central headquarters and four regionally
companies had been affected similarly.14 focused product divisions (Figure 3). To capitalise on local
2 Build and grow. Particularly in developed markets, CRH’s market knowledge, a high degree of individual responsi-
strategic emphasis was on creating clustered groups of bility was devolved to experienced operational man-
businesses, encompassing vertically integrated material agers, within Group guidelines and controls. According to
positions and scalable products and distribution networks. Dr Jack Golden, Human Resources (HR) Director: ‘While
3 Value-based development. Focusing on superior short- and the local operating units have operational autonomy, they
long-term returns, CRH emphasised continued bolt-on do not have independence.’ At the same time, a strong
and larger acquisitions combined with resource-backed team emphasis and collective identity prevailed, reflecting a
market entry points in emerging economies. robust corporate culture.

Figure 1 Products and markets

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 642 CRH PLC

Figure 2 Management and organisation

Figure 3 Group organisation schematic

CRH adopted a rigorous approach to evaluation, regional markets. Ongoing development investment was
approval and review. The twin requirements of per- roughly equivalent to the level of depreciation through the
formance and growth were continually reinforced, with cycle17 and incorporated new plant, capacity extensions
entities having to earn the right to grow. Planning was and plant upgrades.
formalised and interactive, with stretch targets for financial The value of CRH’s rigorous management processes
and operational output measures. Performance measure- was evident in its internal response to the severe industry
ment was timely, formal and rigorous, facilitating early downturn post-2007. CRH put in place a broad-based,
critical review of underperformance, allowing appropri- multi-year programme, focused on reducing the cost base,
ate corrective measures to be put in place and enabling a sharpened commercial focus involving resizing businesses
senior management to draw broader lessons. Continuous and resetting capacity, optimising cash generation and
improvement was relentless, as demonstrated by ongoing maintaining a strong balance sheet.18 In the five years to
programmes of benchmarking and best practice. Products 2012, CRH delivered industry-leading cumulative annual-
and processes were continually re-engineered to yield ised savings of €2.2 billion across structural, process and
higher returns, primarily through greater efficiencies, but procurement components, of which over 40% was per-
also from selective expansion into related products and manent in nature.19 These measures offset around half the

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 CRH PLC 643

adverse profit impact of volume declines and cost inflation Corporate strategy at CRH
over the period.20
Consistent with its federalist philosophy, CRH’s corporate
CRH’s management were characterised by experience,
headquarters was small, employing fewer than 100 people
stability and continuity. In over 40 years, there had been
in Dublin. Including support staff in the four divisions,
only six chief executives, all of whom (like many senior
around 250 people were engaged in headquarters-type
managers) were internal appointments. In 2012, key
activities. Central functions comprised finance, investor
corporate, divisional and operational managers numbered
relations, corporate social responsibility, compliance and
around 400. Managers were drawn from internally devel-
ethics, internal audit, HR and business development, the
oped operating managers, highly qualified and experienced
last of which also acted as a resource on cross-divisional
professionals, and owner–entrepreneurs from acquired
deals, strategic planning and opportunities in emerging
companies, providing a healthy mix and depth of skills and
regions.
backgrounds. Management turnover was low. Such con-
CRH’s senior executive management team of eight was
stancy reflected long-term success through industry cycles,
similarly small and tightly focused. It comprised the CEO,
CRH’s market-driven, performance-related remuneration
COO, finance director and HR director located in Dublin,
policy (comprising variable compensation, manager share
together with the CEO and COO of CRH’s Americas opera-
options and employee share participation) and a range of
tions and the managing directors of CRH’s European
formal and informal mechanisms to promote integration
operations. Notwithstanding the centre’s small size and
(see below). Collectively, low turnover, rotation and pro-
limited range of functions, corporate strategy was pivotal
motion from within resulted in a wealth of in-house indus-
to value creation, growth and development in CRH.
try knowledge and expertise.

Finances Scope and diversification

Finance was an important component of CRH’s strategy By 2012, CRH was a world-leading, diversified international
across sector cycles. The Group was noted for its finance building materials company with extensive and integ-
function, which was characterised by extensive business rated exposure across the breadth of construction activity
knowledge and operational contribution, as well as dili- (Figure 4). CRH’s main product concentration was in prim-
gence, conservatism and prudence. Its contribution was ary materials and heavyside products (cement, aggregates,
evident in tight performance management, strong cash asphalt, RMC and concrete products). Geographically,
generation, a low Group tax charge, careful financial the Group had extensive operations in the developed
governance, diverse funding sources, and strategically markets of the USA and Western Europe. CRH also had a
timed equity funding to underpin subsequent develop- growing presence in emerging economies, some of which
ment activity. CRH was widely recognised as having the were highly prospective. Principal in this regard were
best balance sheet in the sector, reflecting strong debt Central and Eastern Europe (CEE), China and India, while
metrics, significant liquidity and a well-balanced profile Latin America and the Eastern Mediterranean also fea-
of future debt maturities. With typical, healthy values of tured. In most cases, CRH occupied positions of market
6 to 7 times EBITDA/net interest cover and below 40% for leadership, often with substantial market shares (ranging
net debt to equity, CRH possessed the highest long-term to the mid/high teens nationally and over 50% in the case
investment grade credit rating in the sector: BBB+ of cement).
(Standard & Poors).21 CRH’s diversified scope had developed gradually over
Two hallmarks of CRH’s financial management were a time. A preferred method of entering a new market involved
rigorous approach to capital allocation and a strong focus an initial position in primary materials, backed by sizeable
on cash generation. Operations were required to earn a reserves. In developed economies, this was achieved pri-
mid-teen per cent return on invested capital (ROIC) through marily through bolt-on acquisitions which enhanced ver-
the cycle. Newly acquired businesses often found such tical integration, bolstered long-term reserves or filled out
financial rigour challenging. A cash-generative mentality regional and product positions. In emerging markets, CRH
pervaded all operations and was central to the Group’s targeted premium assets as an initial footprint, usually in
evaluation and control processes. Steady-state cash earn- cement and often in partnership with strong local estab-
ings were at least two-thirds higher than reported earnings lished businesses.
per share (EPS). Such strengths enabled CRH to fund sub- Over time, the combination of acquisitions, develop-
stantial development activity of reinvestment in existing ment capital expenditure and selective product extensions
assets and acquisition-led expansion without compromis- resulted in an integrated, complementary and scalable
ing its core financial principles. cluster of businesses. The same process and outcome were

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 644 CRH PLC

Figure 4 Balanced exposure to multiple demand drivers

repeated across geographic markets, occasionally with best practice. Communications opportunities were exploited
additions to the product portfolio. In this way, CRH typic- to the full. CRH’s excellence in external relations was
ally expanded from a local position to a regional presence mirrored internally, utilising communications technologies
and often a national profile. such as the website, email, intranet and bulletin boards.
Poland represented a classic and successful case study of Regular editions of the internal news magazine Contact
diversified scope. In 1995, CRH acquired an initial market were read avidly by managers and employees alike.
presence in cement, ranking first regionally and third CRH operated a Group-wide management development
nationally. Subsequent capital investment of €200 million system to develop the critical experience base of managers,
added 1.8 million tonnes of cement capacity per annum. In particularly when they were more mobile, in their twenties
1998, CRH purchased an aggregates business, diversifying and thirties. As CRH grew bigger, this system had become
further over time into RMC, pavers, asphalt, aerated con- more formal and structured to ensure the systematic
crete, lime and bricks. By 2010, CRH was the biggest and requisite exposure to the wide range of CRH’s operations.
most profitable building materials company in Poland.22 A key element was the management database, on which
Establishing an initial presence served another valuable the core 400 managers in the Group were formally profiled.
function in emerging economies where a very different In addition, there were a variety of formal development
business and institutional context presented challenges. programmes for managers, many of which involved
For a relatively low investment, the Group could learn inputs and presentations on strategy from senior manage-
about how the market functioned, the competitive envir- ment, including the chief executive. These included the
onment, the nature of government–business relations and Management Seminar, Development Forum, Leadership
employee skills and expectations. Development Programmes (one and two) and Business
Leadership Programme. Promotion, rotation and mentor-
ing were also instruments of manager development. HR
Corporate parenting
measures to ensure greater cohesion and consistency of
Senior management were active, externally and internally, policies were designed to foster coordination and a culture
in explaining and promulgating CRH’s strategic stance, of interdependence.
which was explicit, enduring and continually reinforced. At division level, integrated product management had
Over time, the broad thrusts of the Group’s strategy were become progressively strengthened over time, led by the
progressively articulated and refined. Management train- USA. Coordinated divisionally, ongoing best-practice activ-
ing and meetings were used as opportunities to restate key ities involved meetings by small teams of experts at local,
messages, from reinforcing the performance-based ‘right regional and international levels facilitated by technical
to grow’ strategic mantra, to the minutiae of operational advisors. These resulted in highly innovative ideas and

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 CRH PLC 645

exchanges of products, delivering significant synergies. acquired on favourable terms, reflecting the Group’s ‘valu-
There were several best-practice programmes in each of ation discipline’. Purchase price/EBITDA multiples ranged
the four product-based divisions. Best practice was supple- between 6 and 7.
mented by benchmarking exercises and the development CRH’s rigorous and comprehensive acquisition strategy
of common systems platforms. In addition, divisions spon- was singular in conception and execution and had ‘proven
sored formal systematic programmes to improve opera- very difficult to replicate’.25 For identification of prospects,
tional performance and increase efficiency in a range of CRH resourced multiple development teams spread across
areas, including health and safety, recycling and energy the Group (including in India and China), seeking opportu-
recovery. nities and maintaining contact with an extensive data-
Informal mechanisms underpinned integration. base of potential targets accumulated over 30 years. At
Corporate culture was nurtured and sustained constantly. any one time, a considerable number of acquisitions were
The supportive team orientation was evident in informal under active consideration, ensuring a steady deal flow.
mentoring, hands-on assistance and individual and team Each purchase gave rise to further opportunities, in other
coaching common within and across entities. Flexibility (occasionally new) markets.
prevailed, particularly as regards hierarchy and job descrip- Courtship involved a patient and often long process of
tions. HR Director Jack Golden was involved in Group familiarisation and coaching. CRH took time to assess suit-
issues pertaining to France, based on his previous experi- ability and strategic fit, and to know management and their
ence as country manager there for another multinational. evolving needs. Much effort was spent appraising the target
The Group continually reinforced its core values in formal of CRH’s strategy, management, values and expectations,
statements of strategy, in external and internal commun- including upfront clarity on post-acquisition priorities.
ications and through corporate folklore. More subtle mech- It was not unusual for CRH to walk away from a deal,
anisms also existed, including leading by example and clear on grounds of timing, price or compatibility. Sometimes,
norms of acceptable behaviour, such as the ethos of taking acquisitions were completed at a later date.
responsibility in internal reporting. Strong informal net- To aid negotiation, CRH had codified, in a classified,
works existed among managers, even between far-flung proprietary document, the best practice, knowledge and
regions of the Group’s activities, arising from organisa- processes involved in making an acquisition, gleaned from
tional mechanisms of interaction and from a social dimen- many years of experience. This was full of collected wis-
sion to formal events, notably the ceremonial occasion for dom and practical advice on deal-making. An experienced
inducting new managers accompanying CRH’s AGM and operational manager guided each acquisition team. At
the annual Management Seminar. the appropriate time, a senior-level ‘ambassador’ was intro-
Finally, reflecting CRH’s performance orientation, strat- duced to close the deal. Before completion, each deal under-
egy was buttressed by formal and rigorous measurement, went rigorous evaluation, including qualitative operational
evaluation and control processes, ensuring early interven- review, due diligence, strict cash-flow testing and Board
tion and appropriate corrective measures. approval.
Traditionally, CRH’s acquisitions shared many common
Acquisition-led expansion characteristics:
● medium-sized, private, often family-run businesses
Acquisitions were the engine of corporate growth and
● geographic/product market leaders, with potential to
development: ‘CRH has the best track record of its peer
enhance existing Group operations, fill a gap or provide
group . . . of growing returns through acquisitions.’23
a platform for growth
Historically, acquisitions accounted for 70% of CRH’s profit
● careful structuring of deals, often involving initial stakes
growth, with organic growth contributing one-quarter and
with buy options (and/or joint ventures) in new regions/
currency movements the remainder.24 In the 13 years to
product areas
2012, CRH completed almost 630 deals, spending €15.5
● retention of owner–managers to ensure continuity and
billion. Prior to the severe downturn from 2008, acquisi-
maintain human capital.
tion spending averaged €1.5 billion annually, falling to
around €600 million per annum as the recession took hold. Post-acquisition integration to boost returns was rapid and
Traditionally, CRH’s acquisitions were bolt-on in nature well practised. From an estimated level of 10% on pur-
(three to four deals per month at an average cost of less chase, ROIC typically rose to 12% within the first year and
than €20 million), augmented from time to time with to the benchmark level of 15% within two to three years.26
larger deals where there was compelling value and a strong Group financial, MIS and control systems were implemented
strategic rationale. (No single deal amounted to more immediately. Revenue and cost synergies were captured
than 10% of the Group’s capital base.) In general, CRH as benchmarking, best-practice programmes and (if

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 646 CRH PLC

warranted) targeted capital investment were put in place. 4. Earnings before Interest, Tax, Depreciation, Amortisation and
non-operational items (EBITDA).
The central expertise and coordination of CRH’s super-
5. J.P. Morgan Cazenove, ‘On the turn. We initiate on the Sector’,
structure delivered procurement economies of scale, 21 April 2011, p. 27.
enhanced customer access and greater network density 6. J.P. Morgan, Building Materials, 10 September 2008, p. 22.
7. Black, D. ‘America’s materials’, CRH Investor Day 2010, slide 22.
and synergies. After three years, a formal look-back review
8. Exane BNP Paribas, Building Materials, 12 January 2012, p. 10.
was carried out. Although more complex and expeditious, the 9. Deutsche Bank, ‘Global cement trends: 2012–2015 outlook’, 19
acquisition process for larger deals was similar in principle. December 2011.
10. Credit Suisse, ‘Building materials 2012: Another challenging year’,
5 January 2012.
11. Deutsche Bank, ‘How relevant is China for the European cement
Outlook industry?’, 27 January 2012.
12. UBS, ‘European building materials: Significant upside to mid cycle
As CRH grappled with the fifth year of a cyclical downturn, valuations’, 13 July 2009, p. 7.
caution remained the watchword. On the other hand, pro- 13. CRH Annual Report on Form 20-F in respect of the year ended
31 December 2011, p. 10.
gressive actions in recent years had adjusted the Group’s
14. Lee, M. ‘Introduction’, CRH Investor Day 2010, slide 9.
cost base, sharpened its commercial focus and optimised 15. J.P. Morgan Cazenove, ‘On the turn. We initiate on the Sector’,
cash-generating capacity, while maintaining a strong and 21 April 2011, pp. 108, 109.
16. CRH Annual Report on Form 20-F in respect of the year ended
flexible financial position. Moreover, as the Group had
31 December 2011.
learnt during its 43-year history in a cyclical sector, collec- 17. Goodbody Stockbrokers, ‘CRH: Material upside’, 28 June 2007,
tive crises presented individual opportunity. A protracted p. 16.
18. Lee, M. ‘CRH plc Overview’, Société Générale Premium Review
downturn would put pressure on over-leveraged peers,
Conference, 28 November 2012, slide 30.
while CRH retained the capability to ramp up acquisition 19. CRH Full Year Results 2012, 26 February 2013.
spending to €1.5 billion over an 18-month period27 should 20. Lee, M. ‘CRH Presentation’, Sanford C. Bernstein Strategic
Decisions Conference, September 2012, slide 20.
appropriate value-enhancing opportunities arise. Fortune
21. Lee, M. ‘CRH Presentation’, Sanford C. Bernstein Strategic
would favour the brave. The issue was the balance of cau- Decisions Conference, September 2012, slide 3.
tion and daring and, more pertinently, knowing when the 22. Morris, H. ‘Europe materials’, CRH Investor Day 2010, slide 15.
23. Goldman Sachs, ‘CRH’, 18 October 2005, p. 3.
tipping point came.
24. Goodbody Stockbrokers, ‘CRH: Still to play its “Trump Card” ’, 13
July 2005, p. 7.
Notes and references 25. Merrill Lynch, ‘Adding value or hot air?’, 25 October 2005, p. 12.
1. J.P. Morgan Cazenove, ‘On the turn. We initiate on the Sector’, 26. Goodbody Stockbrokers, ‘CRH: Still to play its “Trump Card” ’, 13
21 April 2011, p. 128. July 2005, p. 10.
2. Bank of America–Merrill Lynch, ‘Cement Handbook: Time for more 27. Manifold, A. ‘CRH Presentation’, Pan European Building &
selective stock picking’, 22 June 2009, p. 14. Infrastructure Conference, Bank of America–Merrill Lynch, London,
3. $1 = £0.65 = €0.77. October 2010, slide 29.

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CRH plc: dimensions of successful corporate strategy

Questions for discussion

1. Describe and evaluate the strategy directions pursued by CRH.
2. Describe and evaluate the corporate parenting roles employed by CRH.
3. Discuss CRH’s acquisition strategy and its contribution.
4. Discuss how the Group’s corporate strategy creates value for CRH.
6. In the light of the environment facing CRH in 2013, suggest a plan of action for Myles Lee
and CRH corporate management.